Construction job losses remain heavy, widespread; homebuilding rises, nonres sinks

Seasonally adjusted nonfarm payroll job losses in September totaled 263,000, barely half the average of the last 12 months, the Bureau of Labor Statistics (BLS) reported on Friday. (Seasonal adjustment takes into account normal monthly variations in weather and numbers of work days.) But construction, particularly nonresidential, continued to hemorrhage jobs. Construction lost 15% of its September 2008 jobs in the last 12 months, compared to 4% for the entire nonfarm economy. September losses totaled 51,000 in nonresidential building, specialty trade, and heavy and civil engineering construction combined, nearly the monthly average loss of 54,000 over the past 12 months. Residential building and specialty trade contractors shed a combined 13,000 jobs in September, barely a third as many as the monthly average over the 12-month span. One faintly positive sign was that architectural and engineering services employment, a harbinger of future demand for construction, rose for the first time in 15 months, albeit by only 500 jobs (0.04%). Average hourly earnings in construction tumbled 16 cents to $22.45 in September, bringing the 12-month change to 36 cents or 1.6%, compared to 2.5% for all private-sector production or nonsupervisory employees. The overall unemployment rate climbed to 9.5% in September, not seasonally adjusted (9.8%, seasonally adjusted) from 6.0% a year earlier. The unemployment rate in construction, 17.1%, not seasonally adjusted, again topped every other industry and was up from 9.9% a year earlier. For the eighth month in a row, all 372 metro areas had higher unemployment rates in August than a year earlier, BLS reported on Wednesday. (Seasonally adjusted industry and metro unemployment rates are not available.) Of the 369 areas reporting nonfarm payroll employment, 356 had year-to-year losses, 11 had gains and two were unchanged. The largest percentage gains were in Sandusky, Ohio, 2.7%; Hot Springs, Arkansas, 2.6%; Kennewick-Pasco-Richland, Washington, 2.5%; Jonesboro, Ark., 1.9%; and McAllen-Edinburg-Mission, Texas, 1.5%. If sustained, these gains can lead to more demand for construction. AGC compiled a list of 337 areas, including divisions and subdivisions of the 34 largest metros, for which BLS provided construction employment figures (combined with mining and logging in metros where employment in these industries is small). Construction employment fell over the past 12 months in 324 of these locations, rose in eight and was unchanged in five. The largest 12-month percentage construction employment gains were in Columbus, Indiana, 14% (combined data); Anderson, Ind., 6% (combined); Tulsa (construction only); Longview, Wash. (combined) and Baton Rouge (construction only), 3% each. The worst construction job losses were in Reno-Sparks, Nevada, -35% (construction only); Duluth, Minnesota-Wisconsin, -33% (combined); Tucson, -31% (construction only); Wenatchee-East Wenatchee, Wash., -30% (combined); and Redding, California, -28% (combined). Construction spending in August totaled $942 billion at a seasonally adjusted annual rate, up 0.8% from the downwardly revised July total of $935 billion (initially estimated as $958 billion), but 12% below the August 2008 level, the Census Bureau reported on Thursday. Private residential spending soared 4.7% for the month but was 27% lower than in August 2008. Of the three residential components, the largest-improvements to existing single- and multi-unit construction-jumped 7.4% from a downwardly revised July total but was off 4.0% year-to-year. New single-family construction climbed 4.5%, the third gain in a row, but was 40% below the August 2008 level. New multi-family construction fell 4.5%, an even worse monthly rate than the 36% loss over 12 months. Private nonresidential spending slipped for the fifth straight month, by 0.1%, leaving the total 10% below the year-ago mark. Only two categories showed year-to-year gains: manufacturing, up 5.4% for the month and 31% over 12 months, and power, -0.9% and 11%, respectively. Other major private components fell in both periods: commercial (retail, warehouse and farm), -0.9% and -35%; office, -1.2% and -30%; health care, -1.9% and -3.2%; and lodging, -3.3% and -36%. Public construction spending skidded 1.1% in August but was 3.3% higher than in August 2008. Of the two largest components, highway and street construction rose 0.8% and 3.1%; educational, 0% and 1.8%. Retail chains reported mixed plans for construction last month, according to various articles in the Wall Street Journal. Dollar General Co. "announced plans to increase store openings and remodeling-relocations by 50 each to 500 and 450, respectively" (September 11). Lowe's Cos. "will slow store openings over the next five years to between 35 and 45 stores annually. That's a sharp reduction from the 120 stores the company opened in 2008 and as many as 66 stores planned for this year....Larger rival Home Depot Inc. had already pulled back its expansion, with plans to add 1.5% in retail square footage this year and annually for the next several years. Lowe's development timeline equates to adding 2% to 2.5% to its square footage annually" (September 23). Blockbuster Inc. raised its planned store closings from 1,000 to "as many as 1,560 of its 3,750 retail outlets" (September 16). Construction in Chicago will not get a boost from the Olympics. The International Olympic Committee today awarded the 2016 Games to Rio.